Does the Federal Circuit’s use of Rule 36 call into question integrity of the judicial process?

By Gene Quinn & Peter Harter
February 14, 2017

“Hiding behind this procedural tool that makes their docket more manageable only allows the real problems facing the patent system to fester like an open wound.”

IntegrityOn Thursday, February 9, 2017, counsel for Leak Surveys, Inc., filed a combined petition for rehearing en banc and panel rehearing. This petition relates to a Rule 36 summary affirmance of several inter partes review (IPR) rulings from the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO).

One of the questions raised in the petition is whether the Federal Circuit can “ever affirm a final IPR decision without opinion?” At first glance that may seem like a ridiculous question, but if you ponder the question for even a brief moment and the question becomes rather profound.

According to Federal Circuit Rules, a Rule 36 judgment can be entered without an opinion when it is determined by the panel that any one of five conditions exist and a written opinion would not have precedential value. The five conditions are:

  1. The judgment, decision, or order of the trial court appealed from is based on findings that are not clearly erroneous.
  2. The evidence supporting the jury’s verdict is sufficient.
  3. The record supports summary judgment, directed verdict, or judgment on the pleadings.
  4. The decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review.
  5. A judgment or decision has been entered without an error of law.

There are numerous problems with Rule 36, ranging from the overwhelming number of cases being disposed without opinion (see here, here and here), to the reality that the Federal Circuit does not indicate which of the five conditions are present that justify, in the panel’s opinion, use of the Rule 36 mechanism. But on a fundamental level, by its own explicit terms the Federal Circuit’s version of Rule 36 (which is different than the Federal Rules of Appellate Procedure Rule 36) says that it can only be used when an opinion would not have precedential value.

How is it possible that a decision finding patent claims invalid could have no precedential value? I suppose a decision finding claims valid could have no precedential value, as ironic and idiotic as that is, because a challenger not in privy could still continue to challenge claims without estoppel applying. But when a patent owner has lost claims because they have been declared invalid doesn’t such a decision by its very nature carry at least some precedential value?

Perhaps more interesting is that Leak Surveys makes the argument that the Federal Circuit used Rule 36 to affirm the PTAB on alternative grounds. I understand the argument they are trying to make, which is not as straight forward as the issue they define. Still, what Leak Surveys points to is indeed very troubling.

According to Leak Surveys nearly the entire oral argument was devoted to matters that were not raised by the PTAB, including issues surround 35 U.S.C. 112. That is extremely significant because in an IPR proceeding only novelty (35 U.S.C. 102) and obviousness (35 U.S.C. 103) can properly be raised to challenge claims. Specifically, issues of patent eligibility (35 U.S.C. 101) and description (35 U.S.C. 112) are not jurisdictionally capable of being supported by an IPR challenge. So if the entirety of the oral argument at the Federal Circuit was devoted to issues not briefed, and the Federal Circuit raised questions of 112 that are not simply not appropriate for adjudication in an IPR, there is serious doubt about whether any of the five criteria of Rule 36 apply.

Furthermore, what is the Federal Circuit doing raising issues on appeal that were not addressed by the PTAB, were not briefed by the parties, and which are not jurisdictionally appropriate for consideration in an IPR proceeding? Barely three months ago the Federal Circuit issued an en banc decision in Apple, Inc. v. Samsung Electronics Co. where the Court said they took the case to reestablish the proper appellate review that should be conducted by the Federal Circuit. For too long the Federal Circuit has reviewed everything de novo, as if they are a trial court considering every case for the first time. So writing for the en banc majority Judge Moore explained:

We granted Apple’s en banc petition to affirm our understanding of the appellate function as limited to deciding the issues raised on appeal by the parties, deciding these issues only on the basis of the record made below…

It would seem that the Federal Circuit has once again gone off script for an appeals court, but this time without benefit of an opinion. Instead, the Federal Circuit may very well have gone off the appellate court script but still relied upon Rule 36.

The issue being raised by Leak Surveys is as serious as it is problematic. By issuing a Rule 36 affirmance of the PTAB decisions in a case where so much of the oral argument was devoted to matters not raised by the parties or discussed by the PTAB an ordinary observer could absolutely question the propriety of the Rule 36 mechanism. In other words, did the Federal Circuit really affirm the PTAB, or did they just think the ends justified the means and didn’t want to be bothered writing an opinion?

By using Rule 36 in nearly 50% of cases, and specifically in this case, the Federal Circuit seems to be unnecessarily calling into question the integrity of the judicial process.

Use of a one-word judgment that simply says “affirmed” makes it impossible for a thoughtful and meaningful appeal of the Federal Circuit’s judgment because there is no decision, and certainly no work shown. That Federal Circuit uses this mechanism so much is a slap in the face of the judicial system, but that they don’t even identify which of the five criteria apply is contemptuous. Here, where a reasonable lay observer could conclude that they focused on matters that go beyond the scope of any IPR decision it raises very serious questions; questions that could only be answered with an opinion.

I don’t know that I would have said, as Leak Surveys said, that the Federal Circuit based their decision on alternative grounds. The truth seems to be we just don’t know, which is damning in and of itself. Perhaps more damning than actually knowing that they did base their decision on alternative grounds but still thought the PTAB got the end result correct. There is, however, no question that there is an appearance of impropriety. This is not to say that the panel did anything wrong, but the judicial process has to be beyond reproach and the growing problem of Rule 36 being used in so many cases in and of itself raises serious questions. Here, where there is a legitimate reason to question the decision making process based on the focus on issues not briefed and legal matters not properly decidable in an IPR it is only worse.

If the appearance of impropriety is all that matters when we are talking about lawyer ethics, then the appearance of impropriety should matter to the same extent when we are talking about the integrity of the judicial process. One-word judgments absolutely call into question the integrity of the judicial process, and that is why their use must come to an end.

Perhaps it is time to call a spade a spade and recognize what is really going on here. The Federal Circuit is using Rule 36 as a means of managing a docket that is increasingly out of control. Of course, the Federal Circuit’s docket has exploded primarily as the result of district courts using motions to dismiss to get rid of patents on eligibility under the Alice/Mayo framework, and also thanks to the extreme and unpredicted popularity of inter partes review (IPR). If the Federal Circuit were required to actually write an opinion in every case appealed the entire industry would be complaining about an unacceptable Federal Circuit backlog. Conveniently, Federal Rule of Appellate Procedure 36 envisions judgments being entered without an opinion and the Federal Circuit Rule 36 coupled with extremely liberal usage have taken this to new, and absurd, heights.

The problem remains – the Federal Circuit is using Rule 36 in an increasing plurality of cases that will soon become a clear majority of cases. Hiding behind this procedural tool that makes their docket more manageable only allows the real problems facing the patent system to fester like an open wound. Between the law being hopelessly uncertain, patent examiners that refuse to issue patents, and a PTAB that denies parties even the most basic due process, it is misguided for the Federal Circuit to think they can fulfill their Constitutional and statutory duties with an ever increasing number of one-word decisions that seem to be issued in direct violation of Rule 36 itself.

 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Gene Quinn

Peter Harter has over 20 years of experience bridging the ecosystems of technology, business, law, venture finance and politics by providing advice to management, boards and investors on legislation, regulation, court cases, media, standards, treaties, political campaigns, capital, property and labor. As the founder of The Farrington Group, Peter advises public and private companies, investors, startups and nonprofits on risks from legislation, regulation, court cases, standards, politics, and more. He also helps identify relationships for sales, finance and and executive recruitment. Peter’s career began in 1993 as an Internet lawyer. He broadened in Silicon Valley as head of global government affairs for Netscape and EMusic.com and in business development and sales for Securify. He deepened his experience in policy in Washington, DC, lobbying on patent reform for Intellectual Ventures. Peter has expertise in the areas of patents, copyrights, open source, cybersecurity, export controls, voting, antitrust, nuclear energy, big data, and medical research reform.

To contact Peter please connect with him via LinkedIn.

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Discuss this

There are currently 2 Comments comments.

  1. erich spangenberg February 15, 2017 9:38 am

    Excellent post. Even when I have benefited from a Rule 36 judgment, it felt wrong at some level as if it was that blatant a losing appeal, why were we not awarded costs?

    If you want to clear the docket up a bit–and by failing to do so, the court makes erroneous and misguided appellate filings even worse, why not a three page opinion clearly stating why one side wasted everyone’s time and money along with a granting of costs/fees against the losing side? Even better, impose those costs/fees on losing counsel. That is a better way to clear the docket than a lazy, intellectually dishonest Rule 36 decision.

  2. B February 16, 2017 10:56 pm

    I had a case that was not possibly to be lost. 101 rejection where the PTAB didn’t address the claims as a whole and provided no substantial evidence. Hit with a Rule 36, and the CAFC refused to address the underlying issues, including section 706 of the APA.